Cautious optimism over Fla. foreclosure deal funds

TALLAHASSEE (AP) — Six months after the announcement of a 49-state settlement with lenders over mortgage foreclosure abuses, Florida still hasn't done anything with its share, but a homeowner advocate said Thursday she was "cautiously optimistic."

Cherie Faircloth said she's hopeful state Attorney General Pam Bondi will make sure about $300 million Florida received from the $25 billion deal with five of the nation's largest banks is soon used to benefit homeowners as intended.

Some states have, instead, diverted big chunks of their settlement money to fill holes in their budgets, said Faircloth, a member of the Home Defenders League.

Her Orlando home is among those under water — worth less than their owners owe on their mortgages.

"When we heard about the settlement six months ago we hoped that it might be something that would help us, but the response from our state officials has been extremely disappointing," Faircloth said. "So far very little has been done to help homeowners with this newfound money."

The banks' settlement with state attorneys general and the federal government resulted from such abuses as "robo-signing" — lenders' hiring people to sign foreclosure documents in assembly line fashion with little or no knowledge of what they were doing.

Faircloth joined other homeowner advocates and U.S. Rep. Raul Grijalva, D-Ariz., in a teleconference with reporters to mark the six-month anniversary of the agreement. Oklahoma reached a separate settlement with the banks so it wasn't included in the national deal.

Brian Kettenring of the Campaign for a Fair Settlement expressed disappointment over the slow pace of a federal investigation into foreclosure fraud, saying the government hasn't put enough resources into the effort. Kettenring also said the settlement hasn't made much of a dent in the housing market.

Faircloth said she wanted to see bankers who committed crimes put on trial.

Florida's share of the settlement totals $334 million, but 10 percent — $33.5 million — went into the state treasury as a civil penalty.

Some lawmakers contend none of the money can be spent unless first appropriated by the Legislature. Bondi disagrees but so far has not disbursed any of the funds. Her office has been talking with legislative staffers in an effort to resolve the issue.

Bondi spokesman John Lucas said she's "committed to ensuring that the money recovered on behalf of Florida's homeowners is used in ways that ameliorate the effects of the foreclosure crisis and meet the terms of the settlement agreement."

It says the money must be used "to the extent practicable" for purposes that include avoiding preventable foreclosures and preventing and prosecuting fraud and deceptive acts or practices. The funds also can be used to help compensate homeowners who have been defrauded and pay for housing counselors, foreclosure assistance hotlines, mediation programs, legal assistance, housing remediation and consumer protection.

Faircloth said there's no time to lose.

"Housing in Florida is still a mess," Faircloth said. "I have for sale signs all over my street, empty houses."

She said after never missing a mortgage payment for 22 years her lender recently informed her that the value of her house had fallen below her loan amount.

"I can't fix my home, I can't repair it, I can't do anything, I can't sell it," Faircloth said. "Basically I did everything right and I feel as a citizen that I have been taken great advantage of."